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Citation: 2004TCC50
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Date: 20040209
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Docket: 2003-2840(IT)I
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BETWEEN:
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NORMA DORIS MCKINLEY,
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Appellant,
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and
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HER MAJESTY THE QUEEN,
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Respondent.
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REASONS FOR JUDGMENT
Little, J.
A. FACTS:
[1] The Appellant is 88 years of
age.
[2] The Appellant received a
Disability Tax Credit ("DTC") in the 1999, 2000 and
2001 taxation years.
[3] In the early part of the year 2000
the Appellant was admitted to Inglewood Private Hospital in West
Vancouver ("Inglewood"). Inglewood is a long time care
private hospital.
[4] The Appellant moved from Inglewood
to Hawthorn Park Retirement Community ("Hawthorn Park")
in December 2000. In the 2001 and 2002 taxation years the
Appellant resided at Hawthorn Park.
[5] Hawthorn Park is a Residential
Complex containing 113 residential units located in Kelowna,
British Columbia.
[6] Hawthorn Park is designed for
seniors who require assistance for all activities of daily
living. Barbara Goertzen, R.N., Manager of Resident Services,
testified that Hawthorn Park provided the following services:
- nursing services as
required;
- 24-hour emergency
response;
- monitoring of health
care needs;
- full recreation
program.
[7] While the Appellant was residing
in Hawthorn Park in the year 2000 and 2001, the following amounts
were paid to Hawthorn Park on her behalf per month:
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- Fee for services provided
- Fee for medication assistance morning and evening,
assistance bathing, pendant monitoring and blood sugar
testing
- Meds
- Housekeeping services
Total amounts paid per month
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$950.00
$525.00
$395.00
$50.00
$1,920.00
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[8] In December 2003 the Appellant
moved to Orchard Manor, a full care retirement facility, that is
adjacent to Hawthorn Park.
[9] When the Appellant's income
tax return was prepared for the 2001 taxation year medical
expenses of $38,576.00 were claimed ($33,514.00 of this amount
was paid to Hawthorn Park).
[10] When the Appellant's income tax
return was prepared for the 2002 taxation year medical expenses
of $30,137.00 were claimed ($29,464.00 of this amount was paid to
Hawthorn Park).
[11] On January 20, 2003 the Minister of
National Revenue (the "Minister") issued a Notice of
Reassessment for the 2001 taxation year and reduced the medical
expenses to $5,062.00 by disallowing the amount of $33,514.00
that was paid to Hawthorn Park.
[12] On August 5, 2003 the Minister issued a
Notice of Reassessment for the 2002 taxation year and disallowed
$30,137.00 of the medical expenses that were claimed.
[13] By Reassessment dated July 28, 2003 the
Minister allowed the Appellant to deduct $10,000.00 as a medical
expense for attendant care and allowed the Appellant a DTC.
[14] By Reassessment dated September 5, 2003
the Minister allowed $11,433.00 as medical expenses ($10,000.00
for attendant care and $1,433.00 for other medical expenses) and
allowed the Appellant a DTC.
B. ISSUE:
[15] Is the Appellant entitled to claim any
medical expenses in excess of the amounts allowed by the
Minister?
C. ANALYSIS:
[16] Dr. David Martin of West Vancouver was
the Appellant's family doctor from 1996 to 2001. (As noted,
the Appellant moved to Hawthorn Park in December 2000.) In a
letter dated December 11, 2003 Dr. Martin said:
To Whom It May Concern:
Re: Norma McKinley
DOB: January 10, 1916
This woman was a patient of mine from 1996 to 2001. She moved
from a long-term care facility in West Vancouver to a similar
facility in Kelowna.
Before she left West Vancouver she was completely dependent on
the hospital staff. She was unable to bathe herself, dress
herself, nor administer own medications. This included capillary
blood sugars and dosing insulin to manage her diabetes.
Since then, my information is that she has deteriorated
markedly. She is now blind and has severe dementia.
She is completely dependent upon nursing and auxiliary staff
for all activities of daily living. She would not survive without
the daily care.
[17] Counsel for the Respondent argued that
the Appellant is not entitled to deduct any amount in excess of
the amounts allowed by the Minister since the fees paid to
Hawthorn Park were not on account of full time care
in a nursing home as described in paragraph 118.2(2)(b)
of the Act.
[18] The evidence presented to the Court
indicated that the Appellant received intermittent or part-time
care of approximately two hours per day while at Hawthorn Park,
i.e. she did not receive "full-time care".
[19] Counsel for the Respondent argued that
Hawthorn Park would not qualify as a "nursing home".
The argument of counsel for the Respondent with respect to
nursing homes is supported by a number of Court decisions.
[20] During the hearing, Martin R. McKinley,
the Appellant's son and agent argued that paragraph
118.2(2)(e) of the Act would entitle the Appellant
to deduct the expenses that have been disallowed by the
Minister.
[21] Paragraph 118.2(2)(e) of the
Act reads as follow:
(2) For the purposes of subsection (1), a medical
expense of an individual is an amount paid
...
(e) for
the care, or the care and training, at a school, institution or
other place of the patient, who has been certified by an
appropriately qualified person to be a person who, by reason of a
physical or mental handicap, requires the equipment, facilities
or personnel specially provided by that school, institution or
other place for the care, or the care and training, of
individuals suffering from the handicap suffered by the
patient;
[22] As Dr. Martin noted in his letter:
(The Appellant) "is completely dependent upon nursing and
auxiliary staff for all activities of daily living. She would not
survive without the daily care."
[23] As noted above the Appellant is legally
blind, suffers from diabetes and dementia and is unable to
walk.
[24] Pages D-6, D-7 and D-8 of Exhibit A-1
constitute a Tax Credit Certificate dated September 10, 2003,
which state in part:
Re: Norma Doris McKinley
Answer the following questions as they apply to your
patient's impairment.
1. Can your patient see?
(answer) No.
2. Can your patient walk?
(answer) No.
4. Can your patient perceive, think, and remember?
(answer) No.
6. Can your patient feed or dress himself or herself?
(answer) No.
Has your patient's marked restrictions in a basic activity
of daily living, blindness, or need for life-sustaining therapy
lasted, or is it expected to last, for a continuous period of at
least 12 months?
(answer) Yes.
If yes give the date:
Your patient became markedly restricted or blind, or the
life-sustaining therapy began -
(answer) 2001, 10
Diagnosis
Legally blind
Dementia
As a qualified person, I certify that to the best of my
knowledge the information given in Part B is correct and
complete.
Dr. Irene C. Bergh
[25] Based on the testimony of Barbara
Goertzen and the other evidence submitted, Hawthorn Park would
qualify as an "institution or other place" as referred
to in paragraph 118.2(2)(e) of the Act.
[26] In determining whether paragraph
118.2(2)(e) would be applicable I have considered the
following Court decisions:
1. Dungan v. R.,
[2003] 3 C.T.C. 2156 ["Dungan"], is a case on
point with an almost identical fact pattern. In that case the
taxpayer lived in a facility that was not a licenced nursing
home. The taxpayer claimed a non-refundable medical expense
credit for $26,009.00, the amount paid to the facility over one
taxation year. The Court referred the assessment back to the
Minister for reassessment based on the finding that the amount in
question was a medical expense within the meaning of paragraph
118.2(2)(e) of the Income Tax Act. In coming to its
conclusion the Court stated, at paragraph 12:
12. In Title Estate v.
R., the Minister denied the deceased Appellant the deduction
of $71,361.60, which had been paid by the Appellant in respect of
his stay in an uncertified nursing home. The estate of the
Appellant appealed to the Tax Court of Canada. Judge Bell allowed
the appeal by focusing on the requirements of paragraph
118.2(2)(e) of the Act. One of the requirements
present in paragraph 118.2(2)(e) is the certification that
the Appellant requires the assistance offered by the institution.
Judge Bell concluded that the letter by the Appellant's
physician stating "This person requires supervised setting
since January 31, 1995 due to medical illness. This person
requires a 24-hour companion." was sufficient to meet this
requirement. However, the Federal Court of Appeal overturned the
decision of the Tax Court. Sharlow J.A., speaking for the Federal
Court of Appeal, stated:
In our view, a certificate under paragraph 118.2(2)(e) must at
least specify the mental or physical handicap from which the
patient suffers, and the equipment, facilities or personnel that
the patient requires in order to obtain the care or training
needed to deal with the handicap. The certificates in this case
are simply too vague to meet that requirement.
Justice Hamlyn concluded, at paragraphs 13 and 14:
[13] In this case the
Appellant's Peterborough medical doctor certified the
Appellant had osteoarthritis and early dementia and whose
walking, mental functions and elimination activities were
severely restricted by reason of the impairments (Exhibit A-1).
The evidence shows Peterborough Manor in 1998 was a retirement
home that provided, amongst other things, 24-hour emergency
response, medication supervision, bathing and hygiene supervision
and assistance, regular nutritionally balanced meals, mobility
assistance, nurse call system and a staffed nursing station. In
Exhibit R-3, the Appellant's medical doctor states that
Peterborough Manor was an institution that provided the care she
needed and the supervision she required because of her
progressively worsening medical problems.
[14] I conclude, therefore, the
expense of $26,009.00 was an amount paid for the care of the
Appellant while at Peterborough Manor. The Appellant was
certified by a medical doctor that by reason of her diagnosed
physical and mental handicap, she required the facilities and
personnel specially provided by Peterborough Manor for the care
of those residents suffering from the handicaps suffered by this
Appellant.
2. In Barsch v. Canada, [2001] T.C.J. 428
["Barsch"], one of the issues Justice Rip
discusses is whether there was proper certification as required
per paragraph 118.2(2)(e). He stated:
[29] Counsel for the respondent
argued that no certificate exists that complies with the
requirements of paragraph 118.2(2)(e). However, the
totality of the evidence indicates that three appropriately
qualified persons have certified that Davin suffers from a mental
handicap, and requires treatment at a secure treatment
institution.
. . .
[32] In the case at bar, Dr.
Matthews, certified on a medical form, dated January 12, 1998,
that Davin suffered from severe oppositional defiant disorder and
recommended that Davin requires a very strict, structured,
consistent setting. Dr. Matthews specified the mental handicap
from which Davin suffered. Hence, the first requirement
articulated by Sharlow J. in Title Estate regarding certification
for purposes of paragraph 118.2(2)(e), has been met.
[33] In the medical form, Dr.
Matthews stated that Davin requires a very strict consistent
setting. As well, Ms. Baird, in her Notice of Application for
Secure Treatment Order, dated September 25, 1998, attested that
Davin suffered from a mental or behavioral disorder, that there
was a risk of harming himself or others, and that it was
necessary to confine Davin in a secure treatment institution in
order to remedy or alleviate the disorder. Paragraph
1(l)(u) of the Child Welfare Act states that a
"secure treatment institution" means an institution
prescribed by the Minister of National Revenue
("Minister") as a secure treatment institution.
Schedule 2 of the Child Welfare Act General Regulation
[See Note 17 below] lists eight secure treatment institutions in
Alberta, one of which is in Edmonton: Yellowhead Youth Centre,
where Davin was admitted. Paragraph 43(2)(a) of the
Child Welfare Act states that the person in charge of the
secure treatment institution shall be responsible for ensuring
that the child ordered to the institution is provided with the
diagnostic and treatment services that the child is in need of
"in accordance with the standards prescribed in the
regulations". Thus, the equipment, facilities or personnel
at a structured treatment institution are regulated under the
laws of Alberta. As a result, when Ms. Baird, under the authority
granted to her by the Child Welfare Act, applied for an
order for Davin to receive secure treatment at a secure treatment
institution, her reference to such an institution was
sufficiently specific as to the "equipment, facilities or
personnel specially provided by that ..., institution for the
care and training of individuals suffering from the handicap
suffered by the patient". Thus, the second requirement
articulated by Sharlow J. in Title Estate regarding
certifications for purposes of paragraph 118.2(2)(e), has
been met.
[34] In sum, the evidence as a
whole indicates that Dr. Matthews, Ms. Baird and Judge
Fowler are all "appropriately qualified persons" that
have certified that Davin requires, by reason of his mental
handicap, the equipment, facilities or personnel specially
provided by a secure treatment institution, for the care and
training of Davin for the handicap he suffers.
[27] Justice Rip also referred Justice
Bowman's decision in Radage v. The Queen, 96 DTC 1615
in which Justice Bowman determines that under certain
circumstances legislation needs to be interpreted humanely, at
paragraphs 35 to 37:
[35] Finally, I refer to the
reasoning of Bowman J., as he then was, in Radage v. The
Queen:
(a) The legislative
intent appears to be to provide a modest amount of tax relief to
persons who fall within a relatively restricted category of
markedly physically or mentally impaired persons. The intent is
neither to give the credit to everyone who suffers from a
disability nor to erect a hurdle that is impossible for virtually
every disabled person to surmount. It obviously recognizes that
disabled persons need such tax relief and it is intended to be of
benefit to such persons.
(b) The court must,
while recognizing the narrowness of the tests enumerated in
sections 118.3 and 118.4, construe the provisions liberally,
humanely and compassionately and not narrowly and technically. In
Craven v. The Queen, [1995] T.C.J. No. 239,
94-2619(IT)I, I stated:
The application of the inflexible tests in section 118.4
leaves the court no room to apply either common sense or
compassion in the interpretation of the disability tax credit
provisions of the Income Tax Act - provisions that require
a compassionate and commonsense application.
In my view I stated the test unduly narrowly in that case. I
have heard many disability tax credit cases since that time and
my thinking has evolved. [...] If the object of Parliament, which
is to give to disabled persons a measure of relief that will to
some degree alleviate the increased difficulties under which
their impairment forces them to live, is to be achieved the
provision must be given a humane and compassionate construction.
Section 12 of the Interpretation Act reads as
follows:
Every enactment is deemed remedial, and shall be given such
fair, large and liberal construction and interpretation as best
ensures the attainment of its objects.
(c) If there is
doubt on which side of the line a claimant falls, that doubt
should be resolved in favour of the claimant.
[36] I agree with my colleague
McArthur J. in Bryce v. The Queen that notwithstanding
Bowman J. was referring to the deductibility of disability tax
credits in section 118.3, his reasons apply equally to the case
at bar.
[37] A liberal, humane and
compassionate interpretation of paragraph 118.2(2)(e)
requires that doubt should be resolved in favour of the
appellant.
[28] I am satisfied from the evidence that
was presented, the memoranda of Dr. Martin and the
Certificate of Dr. Bergh that Hawthorn Park provides the
facilities that the Appellant requires.
[29] In my opinion the expenses claimed by
the Appellant should be allowed under paragraph
118.2(2)(e) of the Act.
[30] The appeals are allowed, with
costs.
Signed at Vancouver, British Columbia, this 9th day of
February, 2004.
Little, J.
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